JAC invests US$230m to manufacture vehicles in Mexico

Anhui Jianghuai Automobile Group Corp Ltd, also known as JAC Motors, will manufacture vehicles in Mexico in a joint venture with a local auto company, according to a report in the Financial Times on March 27th citing the latter's chief executive, Elías Massri. The Chinese automaker has invested Ps4.4bn (US$230m) in a plant operated by Giant Motors Latinoamerica SA de CV.

Vehicles produced at the plant will mainly be sold in Mexico and exported to other Latin American countries. Mr Massri said that the local firm would not "depend on the North American Free-Trade Agreement (NAFTA)" for exports or supplies. He added that JAC and Chori Co Ltd, a Japanese company, had been working for two years to invest in the project in Mexico.

JAC's announcement comes amid growing concern over scrapping of the NAFTA agreement and the imposition of a 35% border tax on cars produced outside the US. Global automakers such as Ford Motor Co and Toyota Motor Corp have been targeted by the US's president, Donald Trump, for shifting production to Mexico.

Availability of cheap labour, a weak peso, proximity to the US and membership of NAFTA are reasons for increasing investment in car production in Mexico. Vehicle-makers currently plan to invest around US$14bn in the country to build or expand their plants. South Korea's Kia Motor Corp opened a new plant in the country in September 2016. Germany's Audi AG will start manufacturing its new Q5 vehicles at its US$1.3bn plant in the state of Puebla, which it opened last year.